mysql> create user test identified by password '12345';
ERROR 1372 (HY000): Password hash should be a 41-digit hexadecimal number

You can resolve this by following the steps listed below.

mysql> select password('12345');
+-------------------------+
| password('123456') |
+-------------------------+
| 2ff898e158cd0311        |
+-------------------------+
1 row in set (0.00 sec)

mysql> create user test identified by password ’2ff898e158cd0311′;
Query OK, 0 rows affected (0.00 sec)